Production Planning & Control

The Management of Operations

ISSN: 0953-7287 (Print) 1366-5871 (Online) Journal homepage: http://www.tandfonline.com/loi/tppc20

Impact of competitive conditions on supplier

evaluation: a construction supply chain case study

Dinesh Seth, VSR Krishna Nemani, Shaligram Pokharel & Abdulla Yaqoub Al
Sayed

To cite this article: Dinesh Seth, VSR Krishna Nemani, Shaligram Pokharel & Abdulla Yaqoub Al
Sayed (2017): Impact of competitive conditions on supplier evaluation: a construction supply chain
case study, Production Planning & Control, DOI: 10.1080/09537287.2017.1407971

To link to this article: https://doi.org/10.1080/09537287.2017.1407971

Published online: 04 Dec 2017.

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 Production Planning & Control, 2017
https://doi.org/10.1080/09537287.2017.1407971

Impact of competitive conditions on supplier evaluation: a construction supply chain

case study
Dinesh Setha  , VSR Krishna Nemanib, Shaligram Pokharela and Abdulla Yaqoub Al Sayedc
a
Department of Mechanical and Industrial Engineering, College of Engineering, Qatar University, Doha, Qatar; bL&T Construction, Chennai, India;
c
Technical Services Department, Qatari Diar Real Estate Investment Company, Doha, Qatar

ABSTRACT ARTICLE HISTORY

This research proposes a multi-criteria decision-making (MCDM) framework and demonstrates the impact Received 23 September 2016
of competitive conditions on supplier evaluation process for construction supply chains. The paper focuses Accepted 15 November 2017
on the supply chain of a large-scale housing project in order to illustrate the role of competitive capability
KEYWORDS
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and suppliers’ profile and its influence on supplier evaluation based on prevailing supply/market conditions. Supplier evaluation;
Various scenarios are investigated to demonstrate the impact of competition on supplier evaluation. The construction management;
contribution of the study lies in highlighting the impact of supply/market conditions on MCDM decisions multi-criteria-decision-
causing supplier evaluation ‘imbalance’ and MCDM usage. It is expected that the study will be useful for making; project
project management, construction, supply chain management, sourcing professionals. The findings of the management; supply chain
study are generalisable to projects-based situations such as petroleum refinery and ship building where management
bill of materials typically consists of thousands of items and a large number of suppliers are involved.

1. Introduction to reach13.5% (www.globalconstruction2030.com; Zegarra and

1.1.  Motivation and background
Companies have been managing supply chains for decades,
but never in the history of mankind, did they have witnessed
the kind of competitive pressures that they face now. Therefore,
supply chains have become more intricate specifically due to
the options available and the complexity in terms of compet-
itiveness of the supplier from around the world. Due to the
varied type of projects, types of supplies associated, qualifica-
tion of suppliers, network of suppliers for different products,
and the prevailing market conditions, the construction sup-
ply chain management (CSCM) has become even more chal-
lenging. (Vrijhoef and Koskela 2000; Aloini et al. 2015; Behera,
Mohanty, and Prakash 2015; Balasubramanian and Shukla 2017;
Zarei, Sharifi, and Chaghouee 2017). The problem in the design
of supply chain in the construction sector is also highlighted
by Gosling, Towill et al. (2015). The complexity of the supplier
network can also bring integration problem in the project, thus
causing costs in terms of lost time or lost resources.
The effect of resources, capabilities and competition on the
supply chain performance is undeniable (Cooper and Ellram 1993;
Kerkfeld and Hartmann 2012; Olawale and Sun 2015; Govindan,
Mangla, and Luthra 2017; Seth, Seth, and Dhariwal 2017). The
phenomenal growth in construction sector shows its importance
on the need to correctly execute projects worldwide. For exam-
ple, in 2012, construction sector accounted for 12.2% of global
gross domestic product (GDP) and by 2025 this figure is expected
Alarcón 2017). One of the most important aspects in CSCM is
supplier evaluation due to construction peculiarities, the involve-
ment of multiple stakeholders and the challenging requirements
(Kumaraswamy, Palaneeswaran, and Humphreys 2000; Gosling,
Naim, et al. 2015b;Wu and Barnes 2016). It is expected that the
evaluation should include the impact of competitive environment
(Kaufmann, Carter, and Buhrmann 2010).
Since 2000, the construction industry has seen a number of
CSCM initiatives (Vrijhoef and Koskela 2000; Akintoye and Main
2007; Aloini et al. 2012) to improve efficiency by aligning sup-
plier evaluation as per the needs of the project. Despite these
initiatives, project schedule still slips, confusions still arise due
to multiple stakeholders and conflicting evaluation criteria, the
budget still overruns, and quality is still compromised resulting in
claims and counterclaims, which have plagued the construction
industry. It is also reported that CSCM implementation has been
scattered and partial (Saad, Jones, and James 2002; Gadde and
Dubois 2010) due to a lack of understanding about supplier eval-
uation and the impact of supply/market conditions. This shows an
urgent need for project performance improvement by addressing
CSCM through supplier evaluation (Thunberg and Persson 2014).
For recent studies in this area, readers are advised to refer to de
Araújo, Alencar, and de Miranda Mota (2017), Simatupang and
Sridharan (2016) and Wang et al. (2017).
Construction projects typically involve hundreds of compa-
nies, supplies and a wide range of construction services (Dainty,
Briscoe, and Millett 2001; Behera, Mohanty, and Prakash 2015).

CONTACT  Dinesh Seth  dseth@qu.edu.qa

© 2017 Informa UK Limited, trading as Taylor & Francis Group
 2   D. SETH ET AL.
A good supply chain network can reduce complexity and it can
also help in lowering the costs (O’Brien, London, and Vrijhoef
2002; Essex, Subramanian, and Gunasekaran 2016). In a CSCM net-
work, it is expected that the supplier evaluation exercise empha-
sises on the competitive capabilities and managerial profiles of
suppliers by considering the effect of supply conditions driven by
market competition (Dey 2006; Isaac 2012). For researchers and
practitioners also, it is extremely important to understand the
impact of competition and its implications for supplier evaluation
and sourcing strategy.
At this point, it will be appropriate to introduce two terms that
would be used in this paper: supplier evaluation equilibrium, and
imbalance between supplier competitive capability and supplier
profile due to market competition. The authors define supplier
evaluation equilibrium as that situation of MCDM, like a pan-bal-
ance, where the pull generated from the factors contributing to
competitive capabilities balances the pull generated from the
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factors contributing to supplier profiles. A balanced situation
means that these two forces have the same magnitude but act
in opposite directions. If the market becomes more competitive,
the weight of ‘supplier competitive capability’ in MCDM increases
and influences the balance. Naturally, an imbalance between
supplier competitive capability and supplier profile refers to the
competition dependent condition, where one force exerts more
weight and disturbs the evaluation equilibrium. It also indicates
the dominance of one force over the other and creates a need
for taking into account its impact on MCDM supplier evaluation
exercise. It is expected that the decision-making team and top
management navigating project, should keep an eye over this
imbalance caused by prevailing supply/market conditions and
should also assess its implications on supplies and company’s
sourcing strategy.
There are three major decisions with regard to a sourcing
strategy (Burke and Vakharia 2004; Kotzab et al. 2015) and they
are: (1) criteria for establishing a supplier base; (2) criteria for
evaluating the suppliers (a subset of base), and; (3) the quantity
of goods to order from each supplier. Ranking and prioritisation
models are typically adopted to evaluate suppliers for the first
two decisions. In general, this approach positions each supplier
in terms of objectives and criteria. Based on the total weighted
score, each supplier is ranked against the others. While carrying
out MCDM evaluations in this manner, two gap areas are noticed.
The first gap emerges because of the influence of supply/market
conditions on suppliers’ evaluation. This influence has not been
investigated in the construction sector. The second gap emerges
due to a lack of understanding of the impact of competitive capa-
bilities and suppliers’ profile, on supplier evaluation. After all, the
impact and possible imbalance in the evaluation depends upon
supply/market conditions. This paper addresses these gap areas
by considering an Indian mass-housing construction project and
its supply chain.
According to the KPMG’s Global Construction Survey (2012),
the proportion of the world’s population living in cities is going
to be more than 70% by 2050. In most countries, there is an
immense pressure to provide affordable and effective large
scale housing projects, called mass-housing projects. In India,
mass-housing development, being capital intensive in nature,
mostly remained with government controlled housing boards
for decades. However, due to the need for the redevelopment
of older buildings and the announcements of large scale mass
housing projects recently, the need for better study of CSCM to
enhance efficiency in these projects becomes more important.
The CSCM studies like (Kannan and Tan 2006; Sarkar and
Mohapatra 2006; Chengter, Nguyen, and Shu 2007; Arslan 2012)
discuss supplier evaluation for housing in country specific setups.
However, these studies do not consider the influence of supply/
market conditions, its impact on evaluation and the resulting
imbalance. Supplier evaluation ultimately influences the perfor-
mance of the projects (Dey 2006; Fouché and Rolstadås 2010).
Therefore, decision-making models like MCDM should be used
for a good outcome of supplier evaluation such that incomplete
and erroneous prescriptions of suppliers can be reduced or
eliminated. Scholars like (Wu and Barnes 2011; Ramsay, Wagner,
and Kelly 2013) also express this need for such considerations in
evaluations.
Therefore, the overarching research challenge for this study
is – how the perfect competitive supply/market conditions influ-
ence supplier evaluation in context to CSCM of a mass housing
project?
1.2.  Research questions and scope
This study investigates supplier evaluation challenges faced by
ABC company (name changed to protect the identity), which is
handling a mass housing construction project worth $100 mil-
lion. The company aims to evaluate suppliers of a select cate-
gory of items, which are influenced by perfect competitive
supply/market conditions, using appropriate MCDM framework
so that better decisions on the section of supplier for each item
can be made.
Accordingly, the scope of the work is restricted to the sup-
plier evaluation exercise, influencing sourcing strategy for a
select category of items in context to CSCM of this affordable
mass housing project. This study does not report a detailed math-
ematical description of the chosen MCDM approach but focuses
on research and managerial implications.
The overarching research challenge is decomposed into three
research questions.
(1) Which approach for MCDM evaluation framework is
appropriate for ABC in order to select suppliers for a
select category of the items?
(2) How to highlight the impact of perfect competitive
supply/market conditions on the imbalance in supplier
evaluation exercise?
(3) How competitive supply/market conditions influence
the supplier evaluation exercise and why is it important
to consider its impact?
Rest of the paper is organised as follows. Section 2 highlights
the distinctive features of CSCM along with evaluation complexi-
ties and challenges. Section 3 discusses literature review. Section
4 discusses the research methodology and covers the criteria
selection. It also includes a grouping of criteria and explains the
need to study the imbalance. Section 5 describes items selected
for study, features of perfect supply/market conditions and the
treatment of selected items. Section 6 discusses synthesis fol-
lowed by the next section, which elaborates evaluation scenarios
and helps to visualise the changes in the criteria sets. Section 8
 PRODUCTION PLANNING & CONTROL   3

discusses the conclusions of the study. This section also provides analytical framework, to facilitate understanding of
discussions on contributions, implications, limitations, and future interdependence and independence between the
scope of the study. MCDM components with constraints influencing prob-
lem. Accordingly, subsequent treatment may result in
calculating relative weights, distances, rankings, priori-
2.  Distinctive features of CSCM, supplier evaluation
ties, utilities, optimisation, risk analysis or even genera-
complexities, and research challenges
tion of scenarios.
2.1.  Distinctive features of CSCM (d) Conflicting requirements of multiple stakeholders (end
users, government agencies, financiers/sponsors, devel-
The construction industry has certain peculiarities such as
opers and a variety of affected community groups) make
unique product, the involvement of multiple stakeholders with
the evaluation exercise more complex. For construction,
the temporary organisation, on site production, and inefficient
in particular, internal and external constraints make
flows in comparison to manufacturing (Vrijhoef and Koskela
MCDM treatment challenging. For example, critical front-
2000; Segerstedt and Olofsson 2010; Behera, Mohanty, and
end decisions are needed on procurement, followed by
Prakash 2015). Aloini et al. (2012) have summarised the distinct
strategic (conceptual) design choices, selection of con-
features of CSCM such as transient production system, multi-
tractors and suppliers, decisions on construction meth-
ple stakeholders’ influence, fragmentation, number and type
ods and resources. It may become even more complex
of stakeholders with varied criteria based requirements, buy-
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when one gets into issues like credits, certifications, total

er-supplier relationship, temporary configuration, and change
quality management, inventory decisions (Seth and
inertia which may create risks affecting CSCM. Not only these,
Tripathi 2006; Seth and Pandey 2009), multiple supplies
a construction network also involves multiple organisations
from different resources, environmental clearances and
and relationships influencing the flow of information, materi-
green manufacturing (Rehman, Seth, and Shrivastava
als, services, and fund transfer. Xue et al., (2007) mentions that
2016; Seth, Shrivastava, and Shrivastava 2016), insurance
stakeholders of construction projects are owners, intermedi-
coverage, and risks.
ate-customers, designers, architects, constructors, contractors
(e) 
Proliferating multi-functional/multi-disciplinary and
and suppliers. These stakeholders are organised through a tem-
multi-layered supply networks with conflicting organiza-
porary structure governed by contract conditions and the trans-
tional interests that are mobilised to deliver the desired
actional nature of relationships and are prone to strain among
items/services also add to the complexities. As CSCM
the stakeholders. In most situations, the selection of other stake-
organisation is temporary, it can lead to relationships
holders is done by the owner through the tender price (Watt,
focused on mistrust and short-term thinking in terms
Kayis, and Willey 2009).
of opportunism (Aloini et al. 2012). Location of suppli-
Agapiou et al. (1998) and Bankvall et al. (2010) highlighted the
ers’ warehouses, timeframe of supply, prevailing market
need to reinterpret the evaluation methods. Like in any low cost
conditions, restrictions/quota/control regarding sup-
based contracted stakeholders, the attempt would be to leverage
plies, level and type of suppliers, currency-fluctuations,
on what the stakeholders can get out of the pre-agreed contracts,
taxation, excise-duties, supply chain responsiveness,
which results in an environment where the opportunism rules
e-commerce capabilities, and security aspects are some
(Aloini et al. 2012).
of the other factors that add to the complications in
supplier evaluation and the choice of MCDM. Although
2.2  Suppliers evaluation challenges and complexities there have been rapid developments in computer-based
analysis for supplier evaluation, the understanding of
Supplier evaluation related CSCM is a complicated and it is a
the analysis and results remains a challenge in many
MCDM problem (Kumaraswamy et al. 2004; Watt, Kayis, and
organizations.
Willey 2009; Wu and Barnes 2016). Among various challenges to
apply MCDM, the following are specifically important for CSCM There are a number of MCDM approaches available but they
supplier evaluation. do not have a ‘cure-all’ or a ‘silver bullet solution’ for evaluation and
decision-making requirements (Seth and Rastogi 2009). Selection
(a) As the competition and choices increase, there exists a
and use of an appropriate MCDM still seem to be a problem with
large search space for decision-makers in terms of cri-
the practitioners.
teria, sub-criteria, alternatives, even the option of using
evaluation approaches both as standalone and in various
combinations. 2.3.  MCDM supplier evaluation research challenges
(b) Many times, factors/attributes are non-expressible in
Although, the number of MCDM techniques and their combina-
commensurable units and might reflect psychological
tions are increasing, the ‘fundamental research challenges’ are
aspects and even intangibles. So, one deals with both
the same. Authors have raised the following challenges:
quantitative and qualitative criteria. This is also true with
respect to the levels and sub-levels, fuzziness in the fac- • 
How to ensure harmonisation between the conflicting
tors/attributes, which creates difficulties and influences objectives and requirements of different stakeholders/
the MCDM evaluation. interest groups; considering constraints, sourcing-strategy,
(c) It is relatively difficult to conceptualise and struc- environment conditions, nature of competition, risks and
ture, the components of evaluation problem into an other dynamic considerations?
 4   D. SETH ET AL.
• How to select appropriate evaluation criteria, sub-criteria
and sub-sub-criteria considering constraints of the supply/
market conditions and then link it with MCDM framework?
• How to be rational in institutionalising the overall evalua-
tion approach for the objective assessment of alternatives,
their rankings, priorities, utilities and scoring requirements?
• How to justify or validate the most appropriate decision/
selection among other potential options/solutions by
adopting suitable verification mechanisms such as trade-
off analysis, cost-benefit analysis, critical value checks, risk
avoidance analysis, scenario generation and sensitivity
analysis?
• How to ensure that MCDM framework appropriately sub-
divides decision problem into ‘critical/vital’, ‘essential/abso-
lute necessary’ and ‘desirable/necessary’ portions. As it
affects in building objective functions, linking constraints
and objectives, rankings, hierarchies of the requirements,
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and influence dependence and/or interdependencies?
• How to effectively synthesise the assessment done by an
individual into a group based judgement? As decisions
are made by a group of experts with diversified functional
expertise, conflicting priorities and varied political/eco-
nomic/managerial significance do exist. Typically, either
the individual assessments are synthesised using some
formula or the head of the decision-making team democ-
ratises the process by adopting measures like consensus
building, group discussions, and voting.
Authors believe that fundamental research challenges as
raised above, can only be addressed partially and in varying
degrees, by different approaches, therefore, claims and counter-
claims will continue to appear.
3.  Literature review
A brief literature review is provided here with three sub-sec-
tions. The first section discusses the studies covering evalua-
tion criteria. The second section deals with a brief description
of evaluation methods and concludes with a summarised table.
In the third section, the logical choice of MCDM for this study is
discussed.
3.1.  Evaluation criteria
For supplier evaluation criteria, six journal papers (Weber,
Current, and Benton 1991; de Boer, Labro, and Morlacchi 2001;
Watt, Kayis, and Willey 2009; Ho, Xu, and Dey 2010; Wu and
Barnes 2011; and Chai, Liu, and Ngai 2013) can be referred.
The paper by (Ho, Xu, and Dey 2010) indicates that the most
important criteria are quality, delivery lead time, and price. It
acknowledges that supplier evaluation is a MCDM problem and
multi-criteria in nature and there are criteria and approaches for
the selection.
The search for appropriate criteria began with Dickson’s study
(1966), which ranked 23 different criteria of supplier evaluation.
Weber, Current, and Benton (1991) extended and found that
price, delivery, quality, production-capacity, and location were
the most commonly reported criteria. Zhang et al. (2003) also con-
cluded that price, quality and delivery were the most important
supplier evaluation criteria. Ellram (1990) proposed four groups
for criteria-financial issues, organisational culture and strategy,
technological capabilities, and a group of miscellaneous factors
including risks management. Nydick and Hill (1992) identified
four criteria: quality, price, delivery and services as dominant ones.
Verma and Pullman (1998) studied as to how managers trade-
off between quality, cost, on-time delivery, and indicated that
managers perceive quality to be the most important supplier
attribute, followed by delivery and cost. Bhutta and Huq (2002)
used four criteria to evaluate suppliers namely, manufacturing
costs, quality, technology and services.
Dickson (1966) identified 23 evaluation criteria, subsequent
researchers sought to modify the number, grouping and relative
importance of these criteria in the light of the changing environ-
ment. Barbarosoglu and Yazgac (1997) emphasised on the per-
formance of the supplier, technical capabilities, financial position,
and quality system. Katsikeas, Paparoidamis, and Katsikea (2004)
concluded reliability, competitive pricing, service support and
technological capability as important criteria. There is a broader
understanding that supplier selection criteria should cover sup-
plier profile as it reflects track record, managerial performance
and competitive capabilities such as cost, quality and delivery
services (Krause, Pagell, and Curkovic 2001; Ho, Xu, and Dey 2010;
Chai, Liu, and Ngai 2013; Ruuska et al. 2013).
Based on the findings from the literature above, it was decided
to include criteria influencing both competitive capability and
suppliers’ profile (please, see details in research methodology sec-
tion about how the criteria are chosen involving industry experts).
3.2  Supplier evaluation approaches
For recent reviews, regarding evaluation approaches please refer
to (Ho, Xu, and Dey 2010; Agarwal et al. 2011; Wu and Barnes
2011; and Chai, Liu, and Ngai 2013). A brief description of major
approaches and a summary comparison table (Table 1) adapted
from Sarkis and Sundarraj (2000) and Mistry, Sarkis, and Dhavale
(2014) are given in this section.
Data envelopment analysis (DEA): This method focuses on the
measurement of efficiency by using the measured outputs and
inputs (Jagoda and Thangarajah 2014). Ho, Xu, and Dey (2010)
highlighted three limitations of DEA – practitioners’ confusion
with respect to input and output criteria, subjective assignments
of ratings to qualitative criteria as it treats suppliers generating
more outputs while requiring fewer inputs are more efficient.
Therefore, an efficient supplier may not necessarily become an
effective supplier. In addition, this approach ignores hierarchi-
cal requirement and dependencies among criteria (Ekici 2013).
Please, refer to (Dyson et al. 2001) on the pitfalls and protocols
of using DEA.
Expert systems and artificial intelligence: This family of methods
can include case based reasoning and neural networks catego-
ries. The working depends on raising ‘expert developed’ ques-
tions and seeking ‘acceptable and intelligent answers’. These
questions address qualitative (categorical) and quantitative
criteria. According to Choy, Lee, and Lo (2003), this family can
handle decision-making problems from scratch (first category)
and it can also solve new problems by utilising the knowledge
based on past experience as the basic competence is encoded
within the corpus of earlier problem solving episodes (second
 PRODUCTION PLANNING & CONTROL   5

Table 1. Summary of selected MCDM methods.

Deci- Management Parameter

Evaluation Cost of imple- Data require- Ease of sensi- Economic sion-maker understanding Mathematical mixing/flexi-
Approach mentation ment tivity rigor involvement and comfort complexity bility
AHP M M L L H M L H
DEA M M L M L L H M
Expert system H H L H M M H H
& AI
Mathematical M M M H M L H L
Programming
MAUT H H M M H M M H
Outranking M M L M H L M M
Simulation H H H H L H H M
Scoring L L L L H H L H
Latent class H L L M L L H H
Cluster
Categorical L L L L H H L H
TCO H H L H H H L M
ANP M M L L H M M H
Taguchi loss M M L H M M M L
method
Dimensional H L L M M M L L
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analysis
Note: H, M, L stand for high, medium and low (Sarkis and Sundarraj 2000; Mistry, Sarkis, and Dhavale 2014).

category). Albino and Garavelli (1998) comment that expert-sys-
tems require extensive training and validation, which is costly and
time consuming. Other limitations of this method are program-
ming requirements and experts availability. The major drawback
is the guidance, which is provided on the basis of available knowl-
edge base within the system.
Analytical hierarchy process (AHP)/Analytical networking process
(ANP): This method assumes that a problem can be decomposed
into a hierarchical structure and attributes at each level of the
hierarchy are independent. Both qualitative and quantitative cri-
teria are analysed based on a ratio scale and the subsequent com-
parisons. One of the distinguished advantages of this approach is
the facility of checking through consistency index. Scholars (Saaty
2005; Levary 2007) argue that ANP is suitable when criteria are
dependent. AHP does not consider risks and uncertainties regard-
ing the supplier’s performances. Please refer to (Al-Harbi 2001;
Chan 2003; Dey 2006) for advantages and disadvantages of AHP.
Mathematical programming: This family of methods uses opti-
misation models for supplier comparison. According to Ho, Xu,
and Dey (2010), important techniques in this family are linear
programming, integer-linear programming, integer-non-linear
programming, goal programming, and multi-objective program-
ming. It is argued that due to mathematical complexities in mod-
elling, stakeholders’ involvement are not very high. The study by
(Muralidharan, Anantharaman, and Deshmukh 2002) highlights
the difficulty in using this type of model, where there are mul-
tiple decision makers, arbitrary aspiration levels, and objective
function coefficients.
Multi attribute utility theory (MAUT): In this method, it is assumed
that every factor influencing the situation has some utility, which
varies in different levels. The working is based on ‘utility’ assess-
ment of different factors or criteria. Accordingly, utility curves
for different criteria are generated to reflect a range of decision
maker’s preferences. These curves are used to evaluate each of
the suppliers to obtain a total score for comparison. Readers are
advised to refer (Von and Weber 1993; Min 1994; Dyer 2016) for
details. However, as MAUT results are somewhat abstract, it may
not provide effective trade-offs among suppliers.
Outranking: This family of methods includes ELECTRE, ORESTE,
and PROMETHEE (Parsaei, Wilhelm, and Kolli 1993). The working
depends on realistic preference modelling for the selection of
alternatives and their ranking. It uses outranking relations for
modelling decision maker’s preferences (relational-modelling).
The outranking methods have a unique characteristic of allowing
incomparability between options. This becomes important where
some options cannot be compared for one or another reason. For
details refer (de Boer, van der Wegen, and Telgen 1998; De Leeneer
and Pastijn 2002; Colson and De Bruyn 2014). The limitation lies
with mathematical complexities, which results in lower under-
standing and involvement.
Categorical method: This method assumes that attributes are
independent to each other and are equally important. Accordingly,
suppliers’ performances on the attributes are rated. The method
is easy to implement, requires minimum data and can handle
both qualitative and quantitative criteria/attributes. However,
the method suffers from subjective judgement and treatment,
as equal weights are assigned to all criteria. The method by Wu
and Barnes (2011) works in a slightly different manner – the eval-
uation process consists of categorising supplier’s performance on
a criterion as positive, neutral, or even negative. After a supplier
has been rated on all of the chosen criteria, decision-makers give
an overall rating by ticking one of the three options and suppliers
are evaluated into three categories. This method works well only
when the number of criteria and suppliers are small.
Scoring method: Although there are many versions of scoring
methods, it is one of the most popular methods in evaluation.
The working depends upon subjective assignment of importance
weight to each factor. After deciding on weights, each alterna-
tive is ranked using a scale, for example, 1(worst) to 5(best). A
weighted average of these rankings for each supplier yields the
overall score. The major limitations are the subjective allocation
of weights and qualitative treatment although it works well if
there are past data and if there are fewer criteria and less number
of suppliers.
Simulation: Brandenburg et al. (2014) mention that this family
can include spreadsheet, system dynamics, discrete-event and
 6   D. SETH ET AL.
business game types of approaches. Here, the assumption is to
represent real world situation as a mathematical-logical model.
Then alternate scenarios are created to represent the dynamic
environment. As the approach can create more realistic assess-
ments in terms of functionality and the needed investment, it
allows the evaluation of a broad range of conditions(Doloi and
Jaafari 2002). However, there are huge data requirements, math-
ematical and analytical complexities to adopt simulation.
Total cost of ownership (TCO): The method assumes that all
direct and indirect costs and supporting requirements can be
converted into costs. Therefore, suppliers across the board can be
evaluated based on ‘lowest transaction costs’, thus this method
helps to eliminate bias and non-value adding components.
Disadvantages of this method are the need for tracking and
maintenance of cost data (Bhutta and Huq 2002; Muralidharan,
Anantharaman, and Deshmukh 2002). It works with a small num-
ber of criteria and suppliers, however, the cost of implementation
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is high. Please refer to (Degraeve, Labro, and Roodhooft 2000)
for details.
Taguchi loss function method: In this method, each attribute,
whether qualitative or quantitative, is assigned a target value,
and performance of suppliers with respect to each attribute is
measured as a deviation from the target value. Supplier’s per-
formance is measured as a quality loss, using Taguchi loss func-
tions with respect to risk and benefit categories (Ordoobadi and
Wang 2011). The supplier with the lowest loss score is selected.
The advantage lies in expressing suppliers’ performance quan-
titatively and transferring it into a common language of quality
loss measured in monetary terms. The drawbacks are the lesser
involvement of stakeholders’ subjective allocation of weights and
mathematical complexity in deciding the loss function.
Dimensional analysis: In this method, multiple criteria are com-
bined into a single unified index for each supplier. Accordingly,
performances are compared and rankings are determined
through a series of one to one comparisons. This index is calcu-
lated according to supplier performance against the standard
performance for a set of criteria and relative importance of crite-
ria. According to Braglia and Gabbrielli (2000), it has three distinct
advantages which include easy to use, independence from the
performance measurement units for different attributes, and less
sensitive to the intangible aspects. According to (Ordoobadi and
Wang 2011), major difficulties are in terms of the dimensional
analysis ratio, however, it makes decision-maker indifferent about
the chosen supplier when the value of ratio becomes unity. Also,
it becomes time consuming, if a large number of suppliers are to
be evaluated.
3.3.  AHP emerging as most logical MCDM choice for the
study
Using Table 1 as a reference, a systematic comparison is dis-
cussed below to conclude on the most suitable choice for this
study.
DEA, mathematical programming methods, and AHP are
three popular standalone methods (Ho, Xu, and Dey 2010 and
Agarwal et al. 2011) for supplier evaluation. Wu and Barnes (2011)
mention that DEA can be used for supplier qualification. Studies
like (Dyson et al. 2001; Ho, Xu, and Dey 2010) discourage DEA
for supplier evaluation. As CSCM demands involvement of the
decision-makers, parameter flexibility, management comfort and
low mathematical complexities, which logically leads towards
AHP for supplier evaluation. Saaty and Vargas (2012) mention
that AHP handles MCDM challenges in greater degrees in compar-
ison to other approaches. AHP has previously been used, both as
standalone and in combination, in supplier evaluation by various
authors (see, e.g. Nydick and Hill 1992; Ghodsypour and O’Brien
1998; Bhutta and Huq 2002; Liu and Hai 2005; Ho 2008).
Weber, Current, and Benton (1991) and Yahya and Kingsman
(1999) discussed linear models, mathematical programming
models, cost ratio and categorical methods. Their study con-
cludes that AHP is a practical and systematic method for supplier
evaluation. Nydick and Hill (1992) and Bhutta and Huq (2002)
also favour AHP and claim that it offers a robust framework to
handle MCDM requirements. AHP has been a popular choice for
years both as standalone and in combination with other methods
(Muralidharan, Anantharaman, and Deshmukh 2002; Dey 2006;
Ho 2008; Ho, Xu, and Dey 2010).
Mohanty and Deshmukh (1993), and Saaty and Vargas (2012)
mention that AHP has a capability to handle complex and even
ill-structured problems besides other benefits like simplicity,
ease of use, flexibility in handling a variety of problems. Ferreira,
Arantes, and Kharlamov (2015), and Masella and Rangone (2000)
mention that AHP is one of the most preferred MCDM choices.
It is particularly effective when applied to supplier evaluation
problem.
4.  Research method
4.1.  Case study justification, data details and research
team
Various authors (McCutcheon and Meredith 1993; Yin 2003;
Aken 2004; Ketokivi and Choi 2014) give the advantages of
case study but caution on their application. Case study method
allows problem investigation in real life context and helps to
develop a rich dialogue between the theory and the evidence
(Yin 2003). This method supports the grounding needs of study,
as operational data are grounded in ‘real life’ context and more
likely to be usable (Eisenhardt 1989). It is this feature of the case
study approach, which makes it valuable in developing, testing,
expanding and even refining an operational understanding
of the concepts (Ketokivi and Choi 2014), as is required in the
present study. According to Aken (2004), the solution approach
based application for the techno-managerial problem, as used in
this study, can be used for the development of valid and reliable
knowledge, and can be presented as a case study. This method
also allows combining both qualitative and quantitative meth-
ods. Accordingly, the research team can efficiently make use of
different data collection methods such as archives, interviews,
questionnaires, workshops, discussions, and observations.
Further, scholars (Eisenhardt 1989; Yin 2003; Aken 2004) clarify
that if research demands ‘how’ and ‘why’ type of questions, then
even one situation can be presented as a case study for drawing
meaningful lessons. However, (Voss, Tsikriktsis, and Frohlich 2002;
Yin 2003) caution that the approach requires skilled interviewers
and demands utmost care in drawing generalizable conclusions.
Ellram (1996) mentions that case study approach is appropri-
ate for a situation which leads to the expansion of understanding,

without providing statistical generalisation, and leveraging the
strength of empirical validity.
For this research, the case study approach suggested by
Eisenhardt (1989) is followed. Realising the nature of the study,
it was necessary to form a research team for data collection
and discussions. The research team was formed comprising
of authors, one programme manager, two project managers,
one senior purchasing manager, two purchasing engineers,
suppliers coordination in-charge, materials manager, planning
engineer and one costing engineer to collect necessary details.
Each of the team member from ABC had a relevant experience
of 15+ years and was working for ABC for more than 10 years.
Data for a period of ten and half months were collected for the
analysis. The team started with a series of discussions with the
managers, executives, and engineers regarding items needed,
quantity, types of difficulties which directly and indirectly affect
supplies, quality of items and its impact on project costs, deliv-
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ery requirements, supplier evaluation issues and other costs
contributing factors. Hard copy based information in manuals
and operating procedures and supply records were also exam-
ined. Similarly, suppliers’ facilities were visited. Process reviews
and site visits were used in order to investigate the existing
situation through direct observations and collection of data. In
this manner, the team-members were involved in every phase
of the study. Figure 1 represents the major steps of research
methodology.
4.2.  Establishment of evaluation criteria
Wang et al. (2009) mention that four commonly used methods
for criteria selection are the Delphi, least mean square (LMS),
minmax deviation, and correlation coefficient methods. ABC
has experts available in-house, therefore, Delphi technique was
used to select relevant criteria. Skulmoski, Hartman, and Krahn
(2007) mention that Delphi method is useful in situations where
there is incomplete knowledge about phenomenon/problem.
Vidal, Marle, and Bocquet (2011) also mention that involvement
Problem statement, complexities and
evaluation challenges
Literature review & logical choice of MCDM
Case study approach with experts, criteria,
grouping, sub- criteria, sample calculations,
hierarchy
Selection of items, perfect-competitive
conditions
Analysis and synthesis, sensitivity analysis
Conclusion, implications, limitations & future
scope
Figure 1. Major steps of research.
PRODUCTION PLANNING & CONTROL   7
of experts through Delphi method helps in understanding com-
plexities of the project and the identification of appropriate
criteria.
Experts were requested to rate and discuss criteria influenc-
ing supplier evaluation. Authors and other team members spent
considerable time with experts in confirming the criteria related
details as shown in Figure 2 (for selected category of items, as
explained later) and those suppliers who could be evaluated
under perfect competitive supply/market conditions.
The main identified criteria were: cost advantage or net price,
quality competence, delivery ability, production facilities and
location, management and organisation, and performance his-
tory, and are discussed below.
4.2.1.  Cost advantage or net price
This criterion dominates the situation and even influences to
compromise on other criteria to some extent. Since the nature
of the project is the low cost and affordable housing, naturally, it
has an edge over others in supplier evaluation.
4.2.2.  Quality competence
Quality of supplied items impacts the project quality, cost, cus-
tomer satisfaction, and the image or reputation. The quality
competence criterion is to ensure that approved levels of quality
requirements of the project are met along with the assurance of
consistent and timely supplies. Quality affects warranty issues,
costs and surprises, which are very common during the ‘defect
liability period (DLP)’, a term usually treated as one-year duration
after handing over of the project to the customer.
4.2.3.  Delivery ability
Delivery is an influential criterion as it has the ability to make or
break the schedule of the project and its completion. Delivery
of items in accordance with the agreed timeframe avoids delays
and demonstrates the competence of the company to execute
the project on time in comparison to competitors.
4.2.4.  Production facilities and location
While evaluating, geographical closeness to the construction
site, type of production facilities, and warehousing location of
a supplier matters. This criterion considers supplier’s facilities
from technology, age, and other conditions of set-up. It not
only affects the capacity, quality but also indicates supplier’s
ability to handle demand variations and results in better risk
management.
4.2.5.  Management and organisation
It is important to know the supplier’s management, its profes-
sionalism in ensuring the supply and its attitude towards work.
This can be evaluated by detailing supplier’s organisation struc-
ture, certifications, and its regular updates, and profiles of key
persons for professional commitments and attitudes.
4.2.6.  Performance history
This captures track record of the supplier in meeting the commit-
ments. Supplier’s ability to handle new project can be based on
a supplier’s history on performance, which is evaluated through
the number and type of projects handled, and the satisfaction
and experience of the stakeholders of earlier projects.
 8   D. SETH ET AL.

Warranties & Claim policies 6.71

Financial position 7.29
Technical capability 6.86
Performance history 7.57
Management & Organization 7.71
Production facilities & Location 7.86
Delivery ability 8.14
Quality competence 8.14
Net price/Cost Advantage 8.29

Figure 2. Ratings on criteria by industry experts.

4.3.  Grouping of criteria and its purpose that the chosen criteria should be meaningfully decomposed
further to understand how a particular criterion is influencing
The next step is grouping criteria into two sets, namely, supplier
the situation. Decomposition also reduces subjectivity and facil-
competitive capability and supplier profile. The competitive
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capability means strengths that create a competitive advantage
for the supplier, and it includes cost advantage, quality compe-
tence, and delivery ability. Whereas, supplier profile typically
includes production facilities and location, management and
organisation, and performance history (Verma and Pullman
1998; Krause, Pagell, and Curkovic 2001; Ho, Xu, and Dey 2010
and Chai, Liu, and Ngai 2013). The grouping facilitates in assess-
ing strength and impact of two criteria sets under perfect com-
petitive supply/market conditions. It also helps to understand
possible balance/imbalance between the two sets as shown in
Figure 3. With the change in any of the sides of the triangle, the
overall value gets affected and it results into a tilt affecting the
equilibrium of the balance. It is important to assess the role of
two sets to understand whether the framework is properly bal-
anced and what is the impact of supply/market conditions on
the supplier evaluation exercise. These assessments can be con-
veniently handled by this grouping.
4.4.  Establishment of sub criteria and graphical
representation
A closer look indicates only cost advantage criteria is quantitative
whereas other criteria have some subjectivity. This necessitates
itates the correct use of data (Al-Harbi 2001). This need is felt and
accordingly, after due consultation with experts, one more level
is inserted between the criteria and the alternatives as shown in
overall hierarchy given in Figure 4. These criteria would be used
in AHP analysis.
Cost advantage: Cost advantage data are quantitative in nature
and are obtained from the requests from suppliers’ quotes (RFQs).
These data do not need any sub criteria for treatment and can be
directly used in AHP framework.
Quality competence: Quality competence of a supplier is
decomposed into three sub criteria namely Quality Certifications,
Pricing proportionate, and quality reputation earned through
Number of projects. In context to supplier Quality certifications,
their number and nature reflect the confidence about the doc-
umentation, process management, improvement practices and
compliance. Pricing proportionate is a term used as branding or
grading of the item. This measure reflects on pricing and quality
differentiation of the item. For maintaining a competitive sce-
nario, quality/brand and quality difference is assessed in terms of
pricing difference. This may inherently lead to slightly higher price
for ‘extra’ quality. The third decomposed sub criterion indicates
that Numbers of projects can be considered directly related to the
quality of the supply in different projects. Naturally, better the
Pe hi
Orga ment &

rfo sto
on

rm ry
nizati

an
ce
ge
Mana

rofile
lier P
Supp

ies &
facilit
ction
Produ Location
Co nta
ad
e

va
st ge
etenc
comp ty
Quali

titive
ompe
lier c
Supp apability
c

bility
ery a
Deliv

Figure 3. Imbalance between competitive capability and profile, due to nature of competition influencing supply conditions and evaluation.
 PRODUCTION PLANNING & CONTROL   9

Cost advantage

Quality certifications
Competitive
Capability Quality competence Pricing proportionate
Supplier

No. of projects

Lead time for initial quantity

Delivery ability
Production per month

Alternatives
Year of establishment

Management & Organization No. of workmen

No. of clients
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No. of clients
Supplier
Profile

Performance history
No. of projects

Production per month

Production facilities & Location
Location of factory/central ware house

Figure 4. Overall hierarchy.

supplier, better will be the quality recommendations. It is possible
that supplier may not have a good base of clients but can have the
consistency to serve a number of projects within an organisation
where the supplier is most preferred for his earlier works.
Delivery ability: This decomposition is to measure the ‘partial
and untimely supplies’ considering supplier capacity and quantity
required and, is decomposed into two sub-criteria namely Lead
time for initial quantity and production per month.
Management and organisation: It is decomposed into three
sub criteria. The Year of establishment indicates the age of the
company and helps to differentiate between the new and old
suppliers. It is normally considered safer that the older supplier
means seasoned and experienced supplier. It also reflects sup-
plier’s ability to face competition. Other sub-criterion numbers of
workmen infer the size and strength. Numbers of clients is also a
direct measure of management’s capability in business retaining
and development.
Production facilities and location: It can be decomposed into
two sub criteria. Production per month is a direct measure of the
output of supplier’s production facilities. Location of the supplier’s
warehousing facility is the second one and is measured as the
distance between warehousing facility and project site.
Performance History: It can be decomposed into two sub crite-
ria: Number of clients and Number of projects. Both sub criteria can
be considered as the direct measures of the supplier performance.
4.5.  Sample calculations and hierarchy in Expert-Choice®
The preference scale (Saaty 1980) was used for pair-wise com-
parison by involving the experts. Table 2 represents sample
calculations of supplier competitive capability. Values are tabu-
lated with consistency ratio (CR).
The CR value (CR < 0.1) validates acceptance of the priority
weights. For weights calculation Expert-Choice® is used. For the
benefits and limitations of Expert-Choice® please refer (Ishizaka
and Labib 2009). After calculating individual local weights for all
criteria, next step is the placing of AHP model into Expert-Choice®
to generate overall composite weights with respect to goal as
shown as in Table 3.
For synthesis and sensitivity analysis, selection of the items
governed by perfectly competitive supply/market conditions is
discussed in the next section.

Table 2. Sample calculations for supplier competitive capability.

5.  Items falling under perfectly competitive supply/
(CR = 0.078) market conditions and its treatment
Matrix com- Cost advan- Quality Delivery Absolute
parison tage competence ability weight 5.1.  Identification of items and perfect supply/market
Cost advan- 1.00 2.22 2.38 0.52 conditions
tage
Quality compe- 0.45 1.00 2.45 0.31 Typically, for a residential housing project, the bill of materials
tence contains more than 5000 items. From materials and cost per-
Delivery ability 0.42 0.41 1.00 0.16 spectives, the residential project can be divided into certain
 10   D. SETH ET AL.

Table 3. Local and global weights for criteria.

General Criteria Local weights Secondary criteria Local weights Tertiary criteria Local weights Global weights
Supplier competitive 0.733 Cost advantage 0.523 Cost advantage 0.383 0.3834
advantage Quality competence 0.310 Quality certifications 0.657 0.1493
Pricing proportionate 0.147 0.0334
No. of projects 0.196 0.0445
Delivery ability 0.167 lead time for 500 units 0.667 0.0816
Production per month 0.333 0.0408
Supplier profile 0.267 Management & organi- 0.374 Year of establishment 0.237 0.0237
sation No. of workmen 0.626 0.0625
No. of clients 0.136 0.0136
Production facilities & 0.163 Production per month 0.833 0.0363
location Location of factory/central 0.167 0.0073
ware house
Performance history 0.463 No. of clients 0.500 0.0618
No. of projects 0.500 0.0618
Total 1.0000

broad categories such as concrete structure costs (60–70%), supplied by a supplier, these items are not governed by perfect
which mainly includes costs for items like cement, steel, gravel, supply/market conditions.
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floor materials. Exteriors costs (15–20%), which typically include A particular category of items such as plasterboards, tiles,
costs for items like doors, windows, glass-pans which influence adhesives, paints, fillers and bathroom/kitchen fittings are influ-
‘the look’ and architecture of the project. Electrical and plumbing enced by the market conditions rather than restrictions imposed
works cost (8–10%), which includes items such as pipe-fittings, by supplier cartel or constraints due to design and specifications
electric cables, regulators, and holders. Health, environment, related difficulties. The nature of this category of items is ‘make to
and fire protection system costs account for (5–10%) of the total stock’ type. One finds that a large number of competitive suppli-
costs. ers are available for these items. The worth of this category items
The items belonging to the concrete structure may constitute is of the order of 7–9% of project cost. The supplier evaluation in
(60–70)% of the total cost but supplier evaluation is inappropriate this study is focussed on this category of items.
for this category because project specific requirements are given The competition spectrum ranges from highly competitive
elevated weight rather than those for criteria based evaluation. markets where there are many suppliers, having no or little con-
Similarly, perfect competitive supply/market conditions are not trol over the market price to an extreme where only one supplier
usually applicable in this case. Therefore, these items are not in (monopoly) dominates and has considerable discretion in setting
the investigation domain. prices and supply conditions.
Other category items like fire protection systems and electrical The degree to which a market situation can be described as
works are usually specified as engineering design constrained/ competitive depends on how many suppliers are seeking the
standard items. Since these items are decided by the design or demand of the customers and the ease with which new players
chosen by the standards and the choices are usually limited or can enter and exit the market. In a perfectly competitive market,
the customer is fully aware of the product, pricing is competitive,
any player can play an equal role in supply, the product differen-
tiation is minimal, and the rules exerted by the government are
Table 4. Items selected for analysis and their grouping. equally applied impartially to all players (Mas-Colell, Whinston,
and Green 1995).
Quantity (num-
S. No. Description of item bers) Group
1. Flush door 2100 × 100 10,292 Flush doors (Flush) 5.2  Grouping of selected items
of 35 mm thick
2. Fire check door 7352 FRD door (FRD) Ten supply items from the bill of materials are selected as sample
shutters –
2100 mm × 750 mm items. These chosen items are grouped on the basis of similarity
of 45 mm thick in supply as shown in Table 4. This grouping is necessary to cap-
3. Sliding window(size: 24,237 Aluminium window ture the potential of a particular supplier in a specific category.
1.22 × 1.22 m2) & Louver (Al
4. Louver(0.6 × 0.9 m2) 20,616 works) Grouping supports procurement professionals to source similar
5. Aluminium Al drop 10,300 Aluminium door items from one supplier. It also helps in applying a specific con-
250 mm hardware (DH) sideration for one particular group of items. It also reduces com-
6. Aluminium tower bolt 20,616
150 mm plexities in managing suppliers once project takes off.
7. Aluminium baby latch 41,232 After all, to keep the supplier evaluation exercise meaningful,
75 mm it is appropriate to evaluate different suppliers/alternatives for
8. Aluminium door handle 96,948
100 mm each category group but not for an individual item. This means,
9. Door closure 7100 if ‘n’ suppliers are to be analysed for aluminium window and lou-
10. Butt hinges 146,422 ver (abbreviated as Al works) these suppliers are evaluated not
(4″ × 3″ × 3 mm)
of approved make for each and individual item but for the whole category. The ter-
including screws minology used for suppliers is in accordance with the category.

Authors chose this category as an example, so that reader could
get a good idea about the grouping of items.
5.3  Input for Expert-Choice® (sample data for Al works
suppliers)
As the supply condition for the selected items reflects perfectly
competitive market, the number of suppliers was very high. The
inclusion of new suppliers who were willing to supply increased
the number further. In this situation, it was necessary to reduce
the number of suppliers so that it remains manageable and
meaningful for evaluation. This was done in two stages.
Researchers (Isaac 2012; Hatush and Skitmore 1997; Russell
and Skibniewski 1988) suggest that in order to improve con-
struction performance, it is necessary to prequalify supplier
even before the bidding and entering into the evaluation pro-
cess. Suppliers’ prequalification is a commonly used process for
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identifying a pool of competitive and capable suppliers. From the
prequalified suppliers, quotations or tenders may be sought and
subsequently, suppliers can be approached/verified for the data
provided by them. Therefore, in the first stage, before evaluation
of the chosen pool, ‘Al work’ suppliers (sample category of items),
it was necessary to prequalify competent and capable players.
Therefore suppliers were requested for quotations. Being
quantitative, cost advantage offers easy and quick option for
comparison. As the project is affordable housing, cost advantage
becomes a dominant/filtering criteria for first level screening. In
the next stage, suppliers were shortlisted on the basis of data
collected for evaluation model through suppliers’ interviews and
verifications. Collected data for these selected suppliers (S1, S2,
S3, S4, S5, S6 and S7) were tabulated for various factors such as
the number of projects handled, the number of clients, year of
establishment, production per month, and the number of work-
men. These factors were directly compared against the respec-
tive alternatives. For the comparison of qualitative data such as
quality certifications and location of the warehouse, authors and
experts used rating scale and performed a pairwise comparison
after checking CR. Now the data had become meaningful for fur-
ther use in context to Expert-Choice®. Tables 5 and 6 represent the
sample tables with inverse values for the respective sub-criteria
for the relative preferences for the numbers of workmen and
numbers of projects.
6.  Synthesising results for supplier evaluation
Expert-Choice® offers distributive and ideal modes for synthesiz-
ing the local priorities of the alternatives (suppliers) using the
Table 5. Data pertaining to the relative preferences – the numbers of workmen
for Al works.
S4 S6 S2 S1 S3 S7
S4 1.71 1.33 (1.33) (1.67) (2.0)
S6 (1.28) (2.27) (2.86) (3.45)
S2 (1.79) (2.22) (2.63)
S1 (1.25) (1.49)
S3 (1.2)
S7
S5
PRODUCTION PLANNING & CONTROL   11
global priorities of their parent criteria. Authors chose the ideal
mode based on the guidelines by (Saaty and Vargas 2012).
Distributive (dominance) synthesis mode should be used
when the decision-maker is concerned with the extent to which
each alternative dominates all other alternatives under the crite-
rion. This mode distributes the weights of the objectives among
the alternatives thereby dividing the full objectives’ weight into
proportions relative to the percentage of preference of each of the
alternatives. The ideal (performance) synthesis mode should be
used when the decision-maker is concerned as to how well each
alternative performs and does not influence other alternatives.
As this mode assigns a full weight of each covering objective to
the alternative that is ranked just below it. The other alternatives
receive a weight in proportion to the highest alternative per cover-
ing. The weights/priorities for all the alternatives are summed to
display the best alternative. Thus, ideal synthesis mode supports
the perfectly competitive supply/market conditions, for supply
items in consideration.
After working out priorities for criteria and alternatives
through comparisons, the priorities of the criteria are synthesised
to calculate the global priorities for the alternatives as shown
using the example of Aluminium works suppliers. Figure 5 reflects
Expert-Choice® synthesis output and indicates sorted priority S1,
S2, … S7 suppliers from bottom to top. The analysis shows that
S1 emerges as the best supplier. Upon comparing S1with S2, S3
and S4, one finds ratings are very close to each other.
The results indicate that in a perfectly competitive supply/
market conditions, the difference between the rankings of first
three suppliers is insignificant. It also indicates that differentiation
and domination are due to the competitive capability = 73.3%.
The impact of supplier profile = 26.7% is insignificant over eval-
uation. Therefore, it requires sensitivity analysis in order to assess
the impact of changes in the profile and the capability, which is
discussed next.
7.  Sensitivity analysis of the synthesised results
Sensitivity analyses are performed by varying the values of
weights and then observing its effect on rankings. Authors ini-
tiated sensitivity analysis as shown in Figure 6 without criteria
value modification (supplier profile = 26.7%) as 1st scenario sup-
pliers (Al works).
As shown in Figure 7 (2nd,3rd,4th scenarios) the values of sup-
plier profile were decreased by 16.7, 6.7 and 0% to assess their
impact on supplier ranking For the last scenario, supplier profile
value was increased to 50.1% as shown in Figure 8 (5th scenario).
Figure 6 (1st scenario) represents results without chang-
ing weights (competitive capability  =  73.3% and supplier pro-
file = 26.7%) and indicates S1, S2 > S3 > S4 > S5 > S6 > S7. For
the sake of ranking, one can notice that the difference between
the rankings is minimal. The 2nd scenario (competitive capabil-
ity = 83.3%) indicates S2 > S1 > S4 > S6 > S5 > S3 > S7. From the
S5 Figure 7, one finds that the difference between the rankings has
1.5 further decreased and the ranking order remains almost same.
(1.14) The 3rd scenario (competitive capability = 93.3%) indicates S2 
1.13 > S1, S4 > S6 > S5 > S3 > S7. Again, one notices ranking remains
2.0
2.5 practically the same up-to the first five suppliers. The 4th scenario
3.0 (competitive capability = 100%) indicates S2 > S4, S6 > S1 > S5 
> S3 > S7. Figure 7 (2nd, 3rd and 4th scenarios) supports earlier
 12   D. SETH ET AL.

Table 6. Data pertaining to the relative preference – the number of projects for to 50.1%, ranking does not vary significantly. In all the scenar-
Al works.
ios, one can observe that the difference between the rankings
S4 S6 S2 S1 S3 S7 S5 is minimal and at times it even becomes zero which indicates
S4 1.5 (1.33) (1.67) (2.33) 1.0 1.0 that whether supplier 1 or 2 or 4 is chosen, their ranking remains
S6 (2.0) (2.5) (3.45) (1.49) (1.49) same. It clearly illustrates the dominating effect of competitive
S2 (1.25) (1.75) 1.33 1.33
S1 (1.41) 1.67 1.67 priority over supplier profile due to perfect competitive market/
S3 2.33 2.33 supply conditions. It demonstrates and endorses the impact of
S7 1.0 supply/market conditions due to the heavier weight accorded to
S5
competitive profile and it reflects an imbalance in supplier evalu-
ation. Similar observations were noticed when the analyses were
carried out for other items group suppliers.
trends and indicates that there is no major change in the rank-
ings and difference between the suppliers is insignificant. The 8.  Conclusions, contributions and implications
5th scenario with a supplier profile of 50.1% (Figure 8) shows S3 
> S1 > S2 > S4 > S5 > S6 > S7. Table 7 represents a summary of In this section, there are three sub-sections. First sub-section dis-
five scenarios. cusses the conclusions and contributions of study. The implica-
Sensitivity analysis clearly establishes that stability of ranking tions of the study as discussed in the second sub-section. In the
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practically remains same for Competitive Capability (CP) from 73.3 last sub-section, the limitations of the study and possible further
to 100%. Even with changes in Supplier Profile (SP) from 26.7% research scope are discussed.

Model Name: Aluminum works - Analysis

Overall Inconsistency = .03

S7-[10.3%] 7.4% 2.9%

S6-[14.0%] 12.0% 2.0%

S5-[14.1%] 11.7% 2.4%

Suppliers

S4-[14.6%] 12.2% 2.4%

S3-[15.4%] 10.4% 5.0%

S2-[15.7%] 12.6% 3.1%

S1-[15.7%] 12.1% 3.6%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0%

Supplier Score

Supplier Competitive capability (L: .733) Supplier profile (L: .267)

Figure 5. Synthesis for Aluminium works suppliers through Expert-Choice®.

1st scenario : Original ranking of suppliers with 26.7%weight for supplier profile
73.3% Supplier Competitive Capability 15.7% - S1

26.7% Supplier profile 15.7% - S2

15.4% - S3

14.6% - S4

14.1% - S5

14.0% - S6

10.3% - S7

0 .1 .2 .3 .4 .5 .6 .7 .8 .9 1 0 .1 .2 .3

Figure 6. 1st scenario without weights modifications.

 PRODUCTION PLANNING & CONTROL   13

2nd Scenario at 16.7% weight for Supplier Profile

83.3% Supplier Competitive Capability 15.7% - S1

16.7% Supplier profile 15.9% - S2

14.3% - S3

15.1% - S4

14.5% - S5

14.7% - S6

9.8% - S7

0 .1 .2 .3 .4 .5 .6 .7 .8 .9 1 0 .1 .2 .3
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3rd scenario at 6.7% weight for Supplier Profile

93.3% Supplier Competitive Capability 15.5% - S1

6.7% Supplier profile 16.1% - S2

13.2% - S3

15.5% - S4

14.9% - S5

15.4% - S6

9.4% - S7

0 .1 .2 .3 .4 .5 .6 .7 .8 .9 1 0 .1 .2 .3

4th scenario at 0% weight for Supplier Profile

100.0% Supplier Competitive Capability 15.4% - S1

0.0% Supplier profile 16.2% - S2

12.5% - S3

15.8% - S4

15.1% - S5

15.8% - S6

9.1% - S7

0 .1 .2 .3 .4 .5 .6 .7 .8 .9 1 0 .1 .2 .3

Figure 7. 2nd, 3rd and 4th Scenarios with phase wise decrease in the value of supplier profile.
 14   D. SETH ET AL.

5th scenario at 50.1% weight for Supplier Profile

49.9% Supplier Competitive Capability 16.2% - S1

50.1% Supplier profile 15.3% - S2

17.7% - S3

13.8% - S4

13.3% - S5

12.4% - S6

11.3% - S7

0 .1 .2 .3 .4 .5 .6 .7 .8 .9 1 0 .1 .2 .3
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Figure 8. 5th Scenario with Supplier profile weight increased up to 50.1%.

Table 7. Summary of supplier rankings scenarios.
Competitive capability
Scenarios (CP) supplier profile (SP) Ranking
1st Scenario Cp = 73.3%, Sp = 26.7% S1, S2 > S3 > S4 > S5 > S6 > S7
2nd Scenario Cp = 83.3%, Sp = 16.7% S2 > S1 > S4 > S6 > S5 > S3  interesting for both academicians and practitioners.
> S7
3rd Scenario Cp = 93.3%, Sp = 6.7% S2 > S1,S4 > S6 > S5 > S3 > S7
4th Scenario Cp = 100%, Sp = 0% S2 > S4,S6 > S1 > S5 > S3 > S7
5th Scenario Cp = 49.9%, Sp = 51.1% S3 > S1 > S2 > S4 > S5 > S6  ation exercise is governed by competitive capability. It invites
> S7
8.1.  Conclusions and contributions
In accordance with the research questions raised, authors inves-
tigated supplier evaluation in context to an affordable mass
housing project construction supply chain. The authors have
assessed the impact of competitive capability and supplier pro-
file in perfectly competitive supply/market environment and
highlighted imbalance. Various methods were shown in order to
lead the ABC company to make the right decision on the choice
and use of MCDM for supplier evaluation. These evaluations
are very important both at planning and execution stages of
project when various baselines like cost, scope, time and qual-
ity are extensively analysed to ensure best possible outcome
keeping other considerations in mind. While using AHP, authors
and experts were careful about the use of scale, pairwise com-
parisons, consistency checks (Saaty 1980), and other necessary
conditions.
Calculations coupled with consistency checks and sensitiv-
ity analysis validates study. One can notice that the difference
between rankings is insignificant which indicates ranking prac-
tically remains the same. Questions appear – why it happens and
what it indicates? Does it illustrate the effect of the environment?
It happens due to perfect supply/market conditions and clearly
highlights a tilt in the evaluation framework, indicating imbalance
in criteria sets. This also creates a need to incorporate supply/
market conditions and the nature of competition while carrying
out evaluations by decision makers and project managers.
Supplier evaluation exercise cannot be carried out in vacuum,
i.e. without considering supply/market conditions. Study demon-
strates how supply/market environment impacts on the supplier
evaluation, ranking, its closeness and a tilt/imbalance and may be
In perfectly competitive supply/market environment, sup-
plier profile does not create any differentiation, rather evalu-
risks and raises doubt that whether a purchasing manager can
go ahead or not without bothering for supplier profile (Schneider
and Wallenburg 2013). As evident from the analysis, the impact
of supplier profile is insignificant on the evaluation in this type
of environment.
One can conclude that competition and its nature not only
influence the supplier evaluation but also makes decision makers
to think beyond ranking. The study cautions that supplier eval-
uation does not mean just ranking supplier as S1, S2, S3, S4, S5
but it is equally important to understand the need for higher
order assessment to ensure that whether the supplier evaluation
is really balanced or biased.
Thus, the three major contributions of this research are listed
as below. First, perfect supply/market conditions critically influ-
ence and create an imbalance in MCDM evaluation. It is essential
to highlight that the imbalance related to supply/market con-
ditions influences sourcing strategy and invites supply related
risks in CSCM affecting the project. It is to note that conventional
studies on supplier evaluation tend to focus on mathematics and
mechanics of approach (Handfield et al. 2002; Bayazit, Karpak,
and Yagci 2006; Bruno et al. 2012) and research implications are
often underplayed. Second, the study highlights MCDM evalu-
ation complexities and challenges in CSCM due to multi-stake-
holders and multi criteria based requirements. These challenges
are not restricted to CSCM, they are rather applicable to any other
MCDM based evaluation. Third, the research brings ‘competition
dependent supply/market conditions’ aspect of evaluation to the
attention of the SCM, construction project management, purchas-
ing professionals and MCDM communities. The findings can be

generalised to other settings when they are operated in a perfect
market condition.
8.2.  Implications of the study
From this study, following generalizable implications for
researchers and practitioners can be summarised. These impli-
cations are not restricted to the AHP application in CSCM, rather
applicable to other MCDM evaluation situations.
(1) MCDM evaluation does not just mean ranking, priori-
tisation, optimisation, and calculation of scores. It also
means and includes the process used for evaluation,
the approach used (standalone or integrated), the
applicability of the approach, the environment in which
the evaluation is carried out. These considerations will
provide a clear indication of the impact of environment
and its influence causing imbalance between differ-
Downloaded by [RMIT University Library] at 02:52 07 December 2017
ent criteria families on MCDM evaluation choices and
frameworks. The concept of supplier evaluation equilib-
rium and assessing the extent of imbalance due to mar-
ket/supply conditions can result in a more pragmatic
evaluation.
Although this study focused on AHP based on the eval-
uation of all methods for MCDM, it is expected that simi-
lar results would be obtained with other standalone and
combination approaches. The evaluation framework when
used with any applicable MCDM, would result possibly in
similar conclusions if the materials/items under analysis
are subjected to perfect market conditions. This means,
researchers and practitioners for projects like, ship build-
ing, petroleum rig construction, refineries, and distillation
plants, which have a significant number of items that are
subject to perfect market conditions can use the evalua-
tion equilibrium and imbalance based considerations while
evaluating suppliers.
(2) Most researchers focus on eigenvector calculations
followed by tests for consistency, however, the focus
should be on the assessment of closeness between
the alternatives provided by such a ranking. Stability of
ranking in different supply conditions is more impor-
tant than the mechanics of the MCDM. Handfield et al.
(2002) also point that AHP literature tends to focus on
the mechanics of AHP, instead of practical implications
associated with the methodology. Sensitivity analysis
can be done to see the changes in evaluation results
under different business environment. For decision
makers, ensuring the stability of ranking under varied
market conditions becomes more important than the
ranking itself.
(3) The nature of environment should be considered in
the evaluation exercise. As evident from this study, in
a perfectly competitive supply/market environment,
competitive capability dominates. This domination is
reflected as a tilt in the evaluation framework. For any
evaluation to remain ‘balanced’ it is necessary to under-
stand the equilibrium of criteria sets. Authors used
two criteria sets, the first set is decided by competitive
PRODUCTION PLANNING & CONTROL   15
capabilities and priorities dictated by supply/market
situation and the second set is decided by supplier’s
management professionalism, history and experience
and overall profile. This grouping based comparison
facilitates in assessing strength and impact of these sets
to understand the tilt between the two criteria sets as
shown in Figure 3.
A number of studies are available which discuss about the risks
in supplies, but to best of authors’ knowledge there hardly any
study exists which highlights the imbalance between the criteria
sets and the reasons based on supply conditions and competitive
environment. One finds a tilt in the evaluation which gives a kind
of warning that companies cannot and should not rely only on
competitive priorities and capabilities in the name of ‘competitive
environment’ and can overlook supplier profile. Authors recom-
mend supplier profile and its impact on the evaluation exercise
should be considered to understand the evaluation framework
equilibrium. Although, components of supplier profile criteria
consisting of three different important sub level criteria as man-
agement and organisation, production facilitates and location, and
performance history are not core components of perfectly market
scenario and do not dominate supply conditions but they are
very crucial to ensure the balance in supplier evaluation. Recent
studies (Ramsay, Wagner, and Kelly 2013; Ruuska et al. 2013) also
support these views. Scholars (Krause, Pagell, and Curkovic 2001;
Schneider and Wallenburg 2013) also acknowledge the role of
competitive capabilities of the suppliers, supply/market condi-
tions influencing competition dynamics for supplies.
8.3.  Limitations and future scope
This research is conducted in a country specific CSCM set-up and
only one case study is used. Supply evaluation situation varies in
terms of the scale of operations, product/project nature, num-
ber, supply chain structure, constraints, and market conditions
may differ from one country to another. Another limitations may
be due to lack of supply responsiveness considerations (Seth and
Panigrahi 2015) and due to the selection of specific the criteria
chosen for the study, their grouping, and ensuring homogene-
ity of suppliers. The study did not include any green considera-
tions although it is becoming one of the priorities in the project
environment. Therefore, the study can be extended to include
more criteria sets such as greening based criteria to create mul-
ti-dimensional equilibrium based analysis. It would be interest-
ing to see as to how greening and market conditions would be
impacted vis-à-vis supplier profile on supplier selection.
One may carry out further investigations based on tilt in eval-
uation and incorporating other suitable consideration. More
studies about supplier evaluation, considering supply/market
conditions both within and across sectors and in different setups
are required to understand the nature of competitive environ-
ment and its impact on the balance of criteria sets.
Researchers may include other factors which affect supplier
profile. The same may be tried for competitive capability in a dif-
ferent way. Project management and supply chain management
based explanations may also be tried for justifying evaluation
equilibrium and link it with supply conditions and competition
prevailing in it. Researchers may try different MCDM approaches
 16   D. SETH ET AL.
both as standalone and in combinations to ensure that the eval-
uation exercise is ‘truly balanced’ or imbalanced. On the basis
of cross comparison, authors expect that both researchers and
project management practitioners can help each other in assess-
ing the ‘fit of supplier evaluation exercise’, ‘imbalance in supplier
evaluation due to different supply conditions’ and its impact in
different environments. This would further enrich theoretical and
managerial contributions.
Acknowledgement
Authors wish to acknowledge the support (data, availability of experts for
discussions and clarifications) extended by ABC management in pursuing
this research. Authors also acknowledge suggestions from Dr. Prasanta Dey,
Professor at Aston Business School, UK for his help in improving the quality
and flavour of this research.
Disclosure statement
Downloaded by [RMIT University Library] at 02:52 07 December 2017
No potential conflict of interest was reported by the authors.
Notes on contributors
Dinesh Seth recently got three prestigious research
awards from Emerald UK, in three different categories
namely ‘Outstanding paper, 2017’, ‘Highly commended
paper, 2017’ and ‘Best reviewer & editorial responsibilities
award, 2016’. He is professionally associated with Qatar
University in Mechanical and Industrial Engineering
Department, and Engineering management program,
College of Engineering, Doha, Qatar. 19  years ago, he
introduced process improvement based operations man-
agement and value stream mapping (VSM) based lean through his consul-
tancies, masters project/Ph.D. guidance and researches in India. His studies
on lean and VSM are among most read and most cited studies. He has
Bachelor’s degree in Mechanical Engineering, Masters in Industrial
Engineering & Management, and Doctoral degree (PhD), in Quality and
Productivity Management Practices,(1996). His professional experience
of + 27 years (inclusive of 11 years overseas experience) of teaching, indus-
trial consulting, applied research, administration and corporate training
activities covers a very wide and diverse spectrum of industries and insti-
tutes. He is the author of ‘Global Management Solutions: Demystified’, 2nd
ed., Cengage, Singapore. He is also a recipient of highly commended award,
2006 from Emerald UK for his outstanding research. His name is appearing in
Marquis’s who’s Who in the world & USA 2007–08 and 2010 personalities. His
research interests are in lean management, process improvement tech-
niques and wastes reduction, Quality management, engineering manage-
ment, and green manufacturing management. He can be contacted at
dseth@qu.edu.qa
VSR Krishna Nemani is currently associated with Larsen
and Toubro, in a position of Construction Manager. He
has + 9 years (Inclusive of 4 years overseas) of industrial
experience includes estimating, tendering managing
contracts of mid-large projects, sub-contract manage-
ment and procurement operations of mega projects. His
experience comprises commercial buildings, Affordable
Residential, light factories to projects like Underground
Metros, in domestic and international markets. He holds
bachelor in Civil Engineering from NIT Rourkela, and Post Graduate Diploma
in Industrial Engineering (PGDIE) with specialisation in Operations and
Supply Chain Management from National Institute of Industrial Engineering
(NITIE), Mumbai, India. His areas of interest includes project management,
productivity measurement, supply chain operations, MIS and ERP deploy-
ment. He can be contacted at Krishna.nemani@gmail.com.
Shaligram Pokharel is a professor in Mechanical and
Industrial Engineering at Qatar University, Doha, Qatar.
Prior to joining this university, he held academic posi-
tions in Nanyang Technological University, Singapore. He
holds B.E. (Hons) in Mechanical Engineering from the
Regional Engineering College (Kashmir, India) and
M.A.Sc. and PhD in Systems Design Engineering from the
University of Waterloo, Ontario, Canada. His research
areas are focussed in engineering management, reverse
logistics, emergency and humanitarian logistics, energy planning and mod-
elling, and low carbon supply chains. He can be contacted at shaligram@
qu.edu.qa.
Abdulla Yaqoub Al Sayed is professionally associated
with Qatari Diar Real Estate Investment Company (QDREI)
as Executive Director Technical and is looking after north
Africa projects covering Egypt, Morocco, Tunisia and
Sudan. His rich experience of + 28 years in the areas of
Portfolio management, Program Management, Project
Management and Operation Management in different
countries and work setups, makes him a versatile profes-
sional ideal for top positions. He holds Masters in
Engineering Management, from Florida Institute of Technology, USA.
Currently, he is pursuing his PhD from Qatar University in Lean construction
Management in addition to his professional commitments. He started his
professional career with Hamad Medical Corporation, Doha in Biomedical
Engineering areas followed by 20 years of serving in Qatar University han-
dling the responsibilities of Operations Management and Capital Projects as
a Chief Operating Officer. Mr. Abdulla, defies his age and is always curious to
know, learn about wastes reduction, costs and cycle time reduction for vari-
ous projects and wishes to apply in his work areas. His research interests are
in lean construction management and its real life applications. He can be
contacted at aalsayed@qataridiar.com.
ORCID
Dinesh Seth   http://orcid.org/0000-0003-2207-0248
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